From those to whom much has been given, from them much shall be expected.
-- Luke

Monday, May 4, 2009

Outrage deficit

Spring has sprung, the “animal spirits” are improving, and I just read an inspiring piece over at newdeal20.org by a minister recounting how social security got started, so I am deficient on the shrillness scale this morning:

In 1934, a retired dentist from California named Francis Townsend wrote a letter to the editor of his local paper. He was 66 years old, unemployed and without any savings. His plan was simple: Every citizen over age 60 would receive a check from the government for $200, to be paid for by a 2% sales tax. Jonathan Alter writes that, “Within a year, five thousand ‘Townsend Clubs’ across the country represented between 2 and 5 million members – a powerful new elderly lobby poised to take Congress by storm.”

Inside the administration, Frances Perkins, FDR’s Secretary of Labor and the first woman to be appointed to the U.S. Cabinet, immediately began to advocate for a kind of “social insurance” for the elderly. During FDR’s first year in office, she made more than 100 speeches building support for the idea across the country and brought it up at almost every meeting of the Cabinet.

Poverty rates were already high among the elderly but skyrocketed during the Great Depression, with an estimated unemployment rate for those over 65 at well above 50%. Stories of the old and poor dying alone or starving to feed their grandchildren began to grow. In the midst of crisis, our country made a decision of a distinctly moral nature that the failure of the market to provide for our oldest citizens should no longer be tolerated. It was this moral decision that eventually created one of the key building blocks of FDR’s New Deal, Social Security.

There is no evidence that the New York-Washington D.C. power elite are loosening their grip on the country, or will do so, ever (as Yves and other prominent bloggers keep reminding us) or that the future for much of the baby boom will be more than what passes today for subsistence (I like to joke that I’ll be retiring to a double-wide in the desert in one of FEMA’s “retirement villages”). The elite with their sticky fingers and unrelenting greed will drive us toward the crisis Strauss and Howe predict (see Onward to Ekpyrosis, Death and Rebirth of American...). There may not be an external enemy credible enough to launch a “world war” (Iraq didn’t work out that way, despite the theatrics, and Russia is still basically a bunch of drunks). So I’d guess we’ll have something more like a revolution or break-up fomented by the immiseration of the mass of Americans next time, an alternation back to a domestic crisis like the one before the last one, the Civil War. But it will take us a about decade to get there, if the saeculum runs true to form.

The economics mainstream is studiously ignoring the powerful theory of “animal spirits” of the obscure economist that I’ve dug up and tried to resuscitate, even as the model once again appears poised to beat the consensus forecast… so that the stimulus will be piled upon an organic expansion, just like everyone thought was the problem with fiscal policy… before the Panic of 2008 distorted their thinking.